Wednesday, November 19, 2008
Price Rise Correction
Yesterday's reporting of the inflation figures left something to be desired. Both Sky and ITN they reported that prices had dropped (due to the drop in inflation to 4.5%), when in fact it's the rate of increase that has slowed (but still way out of the BoE target range). Both channels then talked to shoppers who complained that prices haven't dropped. Even ITN's Economics Editor (Daisy McAndrew) was talking of falling prices! While it is true to say that some commodities, like petrol, have fallen in price, the prices of most things are still rising. Is it too much to ask for politics and economic journalists to get their terminology right?
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34 comments:
There are so many journalists who are bad at maths, it's unbelievable. I've only got a GCSE in it (and A-level economics) and I pick up on my colleagues' errors most weeks.
Yes I noticed this on ITV.
The reporter suggested "at last prices have started to fall". Is it any wonder few in the country understand inflation when the news reports it in an incorrect way?
BBC News last night, "A fall in the cost of living..." when what they meant (I hope) was a fall in the rate of increase of the cost of living.
It's the most basic stuff and these errors betray a total lack of understanding and rigour.
Well said Iain!
That's not true. Look at iPods and Televisions...
prices are dropping all the time.
Iain,
You are incorrect. Look at this page: http://www.statistics.gov.uk/instantfigures.asp
The Consumer Prices Index fell 0.2% last month - i.e. prices actually *fell*, not merely the inflation rate. Of course, over the past year prices have risen (4.5%), but over the past month the reports are correct - prices fell.
This puts me in mind of the Conservative minister in the late 80s/early 90s boasting that the rate at which the increase in the monthly unemployment figures had increased had decreased.
The safe rule of thumb is that if you add the figure 10 to the inflation figure bandied around by Bungle and Bungle you will get the true value of inflation each and every time.
Any system that includes ipods or say cds in its inflation calculations, but EXcludes housing is crazy. While the existing ones will always drop, new fads will always be marketed at "must have" high prices to keep the electronic giants in profits.
So the fact that TVs are getting cheaper does NOT affect the actual survival of anyone. Food, heat, clothing, and some token entertainment, perhaps cinema ticket, or pint of beer, relative basics, is all that should count.
Iain, why do you expect journalists to understand anything ? They are mere relay points for labour spin.
Alan Douglas
Prices have not started to fall. As you rightly point out commodities have. The falls in those will sooner or later feed through to the High Street, assuming that they are passed on by debt laden retailers.
That oil should fall back is natural. First, there was a speculative bubble that has burst. Second, global demand is down. A consequence of the downturn particularly in China. However, oil is still in short supply and the price will rise when demand picks up.
Journalists are lazy. Few think for themselves. OK a generalisation but a lot of what appears in even quality newspapers is 'churnalism' i.e. re-cycled government news releases. I suspect many of these journalists have been fed a line by Brown et al's spin doctors. Lower inflation means lower interest rates, and thereby they hope to reflate the economy. A dangerous path when we are so saturated with debt already.
Without being pedantic they are not entirely wrong - the monthly inflation figure is calculated with respect to the last 12 months. So 5.6% in September to 4.5% in October means that prices must have fallen in that period. However, on this measure they are still 4.5% higher than they were 12 months ago.
The CPI did fall by 0.2% in the month of October so technically it is correct to say prices are falling though obviously year on year they have still risen. More importantly the government cant claim any credit for this as it is easy to keep your grass cut short in winter.
Why doesn't the BBC ever mention that the reason petrol prices haven't fallen further, in line with the oil price, is because oil is priced in dollars and sterling has collapsed against the dollar.
The BBC seems to think that the only downside of a collapse in sterling, brought about by Brown's reckless borrowing, is that your summer holiday will be more expensive.
There is never any connection made between poor economic policy, the resulting sterling collapse, and its immediate and day-to-day impact on everyone's wallet.
Is the "fall" in the cost of living in any way similar to the proposed Tory spending "cuts"?
Just what planet do journalists, especially political journalists, live on?
I am a pensioner, I shop with my wife. Prices ARE rising almost on a daily basis.
For years we have been given meaningless inflation figures. A figure that has no bearing whatsoever to what we, the ordinary people, are experiencing.
High salaried people with large expense accounts are so far removed from real life, the question, now, must be just what use are they?
They speak what they are fed by the Government. They accept as fact all the opinion polls without critically analysing them.(Unlike the excellent politicalbetting.com)
On that point, The UNscientific but honest result of friends and their email contacts lists,I did yesterday,revealed, UNsuprisingly that 78% support the Tories and 18% support the Lib Dems. Just 4%!! FOUR per cent would vote Labour!
Now, as my contacts are mostly professional or retired professional people who are not members of any party, I am sure the No.10 Bunker Boys and girls will poo poo this.
I can only say these figures are from people spread all over ENGLAND AND WALES and I can identify each one! I bet MORI and UGOV cannot!!!
Spot on, Iain.
Even the news organisations who got the terminology correct still focussed on the causes of the drop in the rate of increase, rather than why the rate was still much higher than government targets.
When I saw this item last night I wondered if there was a separate set of prices in the shops just for me - prices that had increased not decreased! Or perhaps there are "special shops" (like in the USSR in the old days) where politicians and journos shop.
These people are obviously receiving far too much money if they could actually say prices had dropped. What the tv programmes did show, with their interviews with shoppers, was that the public aren't fooled by propaganda and aren't shopping either! Person after person said "prices haven't dropped" "nothing's cheaper" and "I'm waiting for prices to drop".
It's all very well politicians trying to suggest it's one's patriotic duty to be out there spending - but when people are worried about their jobs, their ever-increasing energy costs, and whether they can afford their groceries - sensible people don't start extra spending.
It's far easier for journalists to say "prices are falling" than it is for them to say "prices are rising less quickly", even through the two are completely different.
In exactly the same way as it'll be easier for them to say "The Tories want cuts in government spending" than to say "The Tories want to to spending rise more slowly".
http://www.statistics.gov.uk/pdfdir/cpi1108.pdf
Charts from page 4 onwards are interesting.
You might want to issue your own correction. As several commentators note, the CPI is down 0.2%. You might argue about what that counts, but the journalists are correct, and this post is basically wrong. I don't know why people are fighting this inflation drop so much - its obvious that prices for consumer goods are coming down, and will do so much more quickly over the winter.
Daisy McAndrew economics editor?
Give it to ITN as they always hire good looking totty/airheads as presenters.
Economic's editor! They are having a laugh.
I noticed the error too. I was shouting at the TV for most of the day about it.
However, on close inspection of the ONS data I do note that the CPI index dropped from 110.3 in September to 11o.0 in October.
See data here:
http://www.statistics.gov.uk/statbase/TSDdownload2.asp
Hence it is true to say that CPI did drop by about 0.25% in October when compared to September - but that does happen occassionally for all sorts of random reasons so it is not a big deal.
While it is technically correct to say that prices did drop overall in October versus September, on an annual year to date basis the CPI was up 4.5%.
The BBC made the same error. I was watching news 24 at about 3.15am - I do not sleep well- and they reported prices had fallen.
Thank heavens the Tories have ONE numerate economist viz. Dr Andrew Lilico. Prices have of course fallen. The mainstream reporters, even the ones with girly first names, are right, and you Iain are wrong.
This is why you are by far and away the Labour Party's favourite Tory blogger.
PS Lovely use of the grocers' apostrophe by anon for Economics (correct) and Economic's (incorrect) by anon 2:28. Making a fair point but ever so subtly. Well done!
Iain, neither the Sky and ITN Jurnos last night talked about the 0.2% per month on month drop, purely saying that inflation has falling from over 5% to 4,5%, and they worried about pointing out the danger of deflation, but not pointing out that the BoE inflation target was 2.5%! Chris Paul has written on the site from the link on his blog here, a fairly nasty article about you. I would point out how many comments you got on this blog and he got on his!
Chris from Algarve
Iain, I ment to point out how many blogs you got on this subject in the first hour and how many Chris Paul got in his first hour!
Chris from Portugal
But it's not an error as several have pointed out. Prices did FALL last month measured by either RPI or CPI.
If you want to bash the government with correct use of statistics rather than incorrect then pick food. I have lost track of the number of times that Brown has said that food prices are falling. That was true last month, but not any more as food prices have started going up again. Index was 183.9 in August, 183.5 in September and 184.3 in October (a 0.4% rise)
"Is it too much to ask for politics and economic journalists to get their terminology right?"
Certainly is.
There's another price correction soon too.
The parents and children of Folly Hill School and their local MP, Jeremy Hunt, who are fighting the:
battle of Folly Hill
v
PM Scrooge
are going to force Gordon Scrooge and Defra to back down on one of the meanest things Gordon Scrooge has ever done.
Would you believe that, in this age of recycling, PM Scrooge is levying a
£50 TAX on children's compost heaps?
What a tight fisted clunking fist you are,
PM Scrooge.
Well done, Jeremy Hunt and Folly Hill. More about this on Jeremy's blog, plus a link to the Folly Hill campaign site.
http://www.jeremyhunt.org/blog.asp?id=115&type=32
They are all arseholes.... really they are so keen to cosy up to the Government they will say anything, even things that are patently untrue....
"Is it too much to ask" ??
Yes ... they are useless.
Having said that .... I was surprised to see the BBC point out that even though there had been monthly falls in foodstuffs, the increase over the year was still 14%
But having said that I think its fair to say Paxman's become a sad parody of himself.
Off topic - just seen the Chipmunk flashing her legs on Newsnight and I am afraid I had the throw up.
Revolting, and even more so when she tries to do 'normal'.
Interestingly Paxman can call Scotland 'Scotland', Wales 'Wales' etc but England are 'Fabio Capello's side'.
What a tosspot. A 2 - 1 away win in Berlin and all Paxo can do is yawn and cannot be bothered to name the team which won..
Stuff the bastard.
This is what comes of hiring people with degrees in the Liberal Arts or Journalism. The financial and scientific illiteracy of those paid to keep us informed is frightening.
Canvas is a nutter
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